Oil prices are up 34% from their lows.
And as I suggested in Fridays blog, once again we have gone (as all markets will do) from very "oversold" territory, back to more reasonable levels.
2 weeks ago on our weekly webinar (and again on last weeks webinar) we suggested that, in all liklihood, the path of least resistance was towards higher prices (and in fact added some energy names to our High Rock tactical model).
Last week, prices broke through and moved above the down-trend line that began in June 2014.
Short positions have likely been covering and there are many factors that can and will influence supply and demand (including the politics surrounding oil) that could push prices up to the $38-40 level if the buying interest continues (at which point more supply may come on line, especially from US fracking operations).
However, it may take sometime and a significant increase in demand to lift prices much beyond that. Much of that will depend on the global economy, which is certainly struggling.
Commodity prices (as measured by the Bloomberg Commodity Index) have also bounced off of their lows:
And that is certainly assisting the C$:
Which hit lows near $US 0.685 in January before rebounding to near $US0.75 on Friday (a 9.5% move). A chance to breath for the snowbirds!
The Bank Of Canada now has the tricky job of weighing this with the upcoming Liberal stimulus budget in determining their next monetary policy moves.
It is time for central bank March policy meetings:
March Madness Indeed!!
Tomorrow is our Weekly Tuesday Webinar for clients:
We shall discuss all of the above and more in greater detail and post the recorded version on our website at or about 5pm EDT:
Feel free to check it out.
Scott Tomenson,CIM Managing Partner, Chief Investment Strategist